Arkansas Cities, Counties Get Their Day in the Sun
by Kyle Massey
Monday, Jul. 22, 2019 12:00 am 6 min read
This solar power array by Scenic Hill Solar powers Clarksville Connected Utilities, the Johnson County city's municipal utility.
"Do you like money?"
"Are you interested in saving a lot of it?"
That's Rick Vance's simple pitch to towns, counties, agencies and schools freed by a new law to partner with third-party companies in solar energy projects.
Vance is regional director for Entegrity Energy Partners LLC of Little Rock, one of several Arkansas solar providers riding the wave as local governments, agencies and schools plunge into a new solar mainstream. (See list below.)
With utility savings from solar arrays and energy performance contracting, non-taxed entities are "making improvements, doing deferred maintenance and even using some for big capital projects," Vance said.
"Solar is now the cheapest way to buy electricity. "A combination of the new law [Act 464 of 2019], tax advantages and other factors mean this is the best time" to act, he said, "with no upfront capital costs and guaranteed savings. Why would you not do this?"
Vendors like Scenic Hill Solar and Seal Solar of North Little Rock and Today's Power Inc. of Little Rock are all building multiple government and school arrays this year.
"Interest in solar by governmental and educational entities has really escalated," said Michael Henderson, president of Today's Power. He said changes in law and tax incentives add up to a good bottom line.
Attractive Savings
"Today, solar is available for almost anyone for under 6 cents per kilowatt-hour, and for larger systems well under 5 cents. These savings are very attractive for budget-strained governmental entities."
The average Arkansas retail electricity price is 10 cents per kilowatt-hour, according to June data from the U.S. Energy Information Administration.
County solar projects are either built or underway in Washington, Phillips and Jefferson counties; cities joining the parade include Fayetteville, Clarksville, Helena-West Helena and Stuttgart, which announced a collaboration with Scenic Hill just last week. The Walnut Ridge City Council is considering a project with Entegrity, which is also working with Searcy Water Utilities on a solar panel system approved Tuesday by the utility's board.
Today's Power will break ground on a solar plant for the city of Paris (Logan County) this summer, the company revealed exclusively to Arkansas Business last week. It is already building Fayetteville's city system, featuring 10 megawatts of solar production and up to 24 megawatts of battery storage, on 87 acres at the town's two water treatment plants. Ozarks Electric Cooperative is another partner in those arrays. Scenic Hill is planning a 6.5-megawatt plant for Ouachita County and its seat, Camden.
Katie Niebaum, executive director of the Arkansas Advanced Energy Association, said solar's cost advantages let local leaders "free up precious resources, many times for critical items that have been delayed due to budget restraints. Moreover, solar projects provide jobs and serve as an economic multiplier in the communities where they are developed."
Pulaski County Seeks Bids
Pulaski County Attorney Adam Fogleman sees vast potential in solar coupled with energy performance contracting, which optimizes energy savings by refitting buildings with LED lighting and efficient HVAC and control systems. "It isn't just an environmental approach; it's also a finance approach that gave us a budget-neutral strategy to address 10-plus years of deferred maintenance for county facilities."
The county requested bids from solar vendors, hoping to shave $250,000-$325,000 from its million-dollar annual electric bill. Central Arkansas Water and the cities of Russellville and Conway have also issued requests for solar proposals.
Fogleman is seeking a deal to provide 80-100% of the power gobbled by Pulaski County's 40-odd buildings. A committee to weigh proposals will begin forming within weeks.
Entegrity of Little Rock handled a countywide energy performance contract with Pulaski County, including putting new efficient HVAC units in courthouses like this one in Little Rock. The $5.2 million project is saving taxpayers $445,792 a year, officials said.
"With the incentives available to the private developer, the price I'd anticipate would save the county between 25% and 35%," he said. The savings would be a general revenue windfall, allowing the Quorum Court to decide how to redirect the cash. "That could mean expanding services, or addressing deferred maintenance needs, or helping with all the services the county provides. Savings derived from a solar service agreement would give the county much-needed flexibility without causing the budget to go up."
A 30% federal solar investment tax credit is also fueling sun fever, but it will start to fall after this year, to 26% for 2020, 22% in 2021, and so on, said Vance of Entegrity. "At 26% next year, it will still be a bargain, but not quite as good a deal."
'Forward-Leaning'
Scenic Hill CEO and former Arkansas Lt. Gov. Bill Halter agreed. "This is a very good time to act, because folks who can move quickly will achieve the benefit of a higher tax credit. These are forward-leaning projects for communities and counties. The municipal project in Stuttgart will provide 100% renewable energy for city operations, save citizens tax dollars, lock in lower energy prices for 30 years or more, and contribute to economic development, all while improving the environment. It's a four-part win for government and citizens."
Pulaski, the first county to take advantage of EPC contracting, previously turned to Entegrity for a $5 million efficiency project calculated to save $446,000 a year. Fogleman called third-party solar the logical next step.
While Pulaski County's vendor will own and operate the solar plant, Washington County took a different approach, said Dwight Gonzalez, director of county buildings and grounds. "We wanted to own the array, to own everything, and performance-based contracting let us do that. All the savings in our project have to be guaranteed."
The energy performance contractor is Johnson Controls, an Irish multinational with headquarters on Colonel Glenn Road in Little Rock, and it selected Seal and LightWave as solar installation contractors.
"If we are guaranteed, say, $500,000 in savings and that falls $50,000 short, the county will get a $50,000 check to cover the difference," Gonzalez said. "We're going to be the largest county-owned solar producer in the state. With that, LED lighting, water conservation and other measures, we'll be able to take care of some deferred work," including replacing 88 HVAC units around the county.
"I don't have to go to the Quorum Court for this money," Gonzalez said. "We get it by spinning back the meter, and using money that would have gone to the electric bill. We call it capital cost avoidance."
The state's EPC system was initiated by law in 2013, developed by industry leaders and financial professionals in 2014 and expanded to municipalities and counties in 2015, according to the Arkansas Department of Environmental Quality.
Heather Nelson, president and co-founder of Seal Solar, which rebranded itself from Seal Energy Solutions this year to emphasize its tightened focus, noted that before starting the Washington County project, her company completed the current largest county-owned solar system in Jefferson County.
"Savings from solar directly impact every taxpayer in those areas," she said. "Jefferson was the first county in Arkansas to both install and operate commercial-grade solar. There are a lot of ways to fund solar today, but for government entities performance contracting is a great financial vehicle, with little to no cash out." Nelson urged businesses and governments to view energy spending holistically. "It has always been an expense line, but now it is an opportunity to invest in technology that will save money for decades."
Arkansas Solar Projects for Public Entities
Capacity: 2 MW
Status: Under construction
Contractor/Operators: Seal Solar and LightWave Solar (via Energy Performance Contracting with Johnson Controls, which contracted out the solar work)
Capacity: 400 kW
Contractor/Operators: Entegrity
Contractor/Operators: Seal Solar and LightWave Solar (via EPC contract with Johnson Controls)
City of Helena-West Helena
Status: Under development
City of Fayetteville
Capacity: 10 MW solar, 12 MW/24 MWh storage
Contractor/Operators: Today's Power Inc.
Clarksville Connected Utilities
Capacity: 6.5 MW
Status: Completed in 2018
Contractor/Operators: Scenic Hill Solar
Capacity: 2.86 MW expansion
Status: Announced in May 2019
City of Stuttgart
Status: Announced July 16
City of Paris
Status: Breaking ground Summer 2019
City of Camden/Ouachita County
Status: Pending final approval
Status: Request for proposals
City of Russellville
City of Conway
Central Arkansas Water
City of Walnut Ridge
Status: In discussion
STATE AGENCIES, COLLEGES & UNIVERSITIES
Department of Correction
Arkansas Community Correction
Arkansas State University-Newport
Contractor/Operators: Lightwave Solar (via EPC contract with Johnson Controls)
Capacity: 321.1 kW
Contractor/Operators: Performance Services
Southern Arkansas University Tech
Contractor/Operators: Today's Power
Buffalo Island
Contractor/Operators: Stone Creek Solar
Guy-Perkins
Status: Design stage
Arkansas National Guard, Camp Robinson
Source: Arkansas Advanced Energy Association
Arkansas Department of Environmental Quality, Bill Halter, Heather Nelson, Arkansas Advanced Energy Association, Michael Henderson, Today's Power Inc., Johnson Controls, Scenic Hill Solar, Adam Fogelman, Entegrity Energy Partners LLC, Katie Niebaum, Rick Vance, Seal Solar Energy Solutions, Dwight Gonzalez